India's proposed retaliatory tariffs on US goods may 'cast shadow' on trade deal talks
India's plan to impose retaliatory import duties on certain US goods, responding to American tariffs on steel and aluminium, could "cast a shadow" on the ongoing trade deal talks between the two countries, the Global Trade Research Initiative (GTRI) said on Tuesday.
According to the think tank's report, the issue could be resolved if the US agrees to hold consultations with India or withdraws the tariffs. If not, India is likely to go ahead with its retaliatory tariffs by early June, which could impact US exporters and escalate trade tensions.
Earlier, in a formal move, India has notified the World Trade Organisation (WTO) of its intent to suspend certain trade concessions previously granted to the US. This decision is in response to safeguard duties imposed by Washington on Indian steel, aluminium, and derivative products since 2018, citing national security.
The suspension could result in higher tariffs on certain US products. Whilst specific items remain undisclosed, India had previously imposed retaliatory tariffs on 28 US products in 2019, including almonds, apples and chemicals.
"India's latest WTO action comes at a delicate moment.
New Delhi and Washington are exploring a broader free trade agreement, and this retaliation could cast a shadow over negotiations," GTRI Founder Ajay Srivastava said.
He further continued that this stance reflects India's firm position, particularly in strategically important sectors like steel and aluminium, which align with its 'Make in India' initiative.
"Much now depends on Washington's response. If the US engages in consultations or withdraws the contested measures, a resolution may be reached.
Otherwise, India's tariff response could take effect in early June," he said.
India’s latest notice to the WTO, dated May 12, invokes its right under the WTO’s Agreement on Safeguards (AoS), which allows countries to retaliate if another member imposes safeguard measures without proper consultation.
Despite India's request for consultations in April, the US maintained that the tariffs were imposed for national security reasons.
The resolution depends on the US response. India aims to recover approximately USD 1.91 billion through retaliatory duties, corresponding to additional duties collected by America on Indian exports valued at USD 7.6 billion.
The dispute centres on US safeguard tariffs on steel, aluminium, and related products imports, initially implemented in 2018 citing national security concerns and subsequently renewed multiple times. The most recent extension was implemented through US Presidential Proclamations dated February 10, 2025, becoming effective from March 12 this year.
India contends that these measures, whilst not formally declared as safeguard actions by the US, effectively operate as such and breach WTO regulations under both GATT 1994 and the Safeguards Agreement.
"Crucially, the US did not hold mandatory consultations under Article 12.3 of AoS, prompting India to assert its right to retaliate," Srivastava noted.
India has previously engaged in safeguard retaliation. Following the US's decision to remove India from its GSP programme and maintain steel and aluminium tariffs
, India implemented increased duties on 28 American products in June 2019.
This response, affecting approximately USD 240 million in trade value, represented India's initial implementation of WTO-permitted retaliation. These duties were lifted in September 2023 after Prime Minister Narendra Modi's state visit to Washington, during which both nations agreed to settle six active WTO disputes, including this particular case.
Currently, India and the US are negotiating a bilateral trade agreement (BTA), with an Indian delegation expected to visit the US this week to continue talks.
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